It was a Thursday night in July, when I got the call. I was only 21 years old at the time and had been up in Grand Rapids, Mich., all week studying to take my Series 7 securities exam to start my career in financial services.
It was one of my dad’s friends calling to tell me that my father had just passed away of a sudden heart attack. That four hour drive home was the hardest drive I had ever made. At one point, I pulled over on the highway to get sick, as I grieved and tried to take in the moment and shock of my loss.
Weeks later, after laying my father to rest, we met with his current financial advisor. A decision among the group was made after that first meeting that we would each go our separate ways and leave the current advisor.
A few years earlier, while I was in my teens, my parents had gotten a divorce and, later, both remarried. Both families had children from previous marriages, so we became a blended family, like many American families today.
My father, mother, and my first mentor, Mike Johnson, had taught me a lot about saving and investing up to that point. Dad lived by those principals and had worked hard to be financially responsible and plan ahead.
Being from a blended family, I learned a lot about the unique dynamics of dealing with a loss of a loved one and have learned first-hand the financial affairs and challenges that can happen along the way.
Now, as a financial professional for over 20 years who deals with similar situations with clients, several specific steps can be taken so other advisors don’t have to suddenly lose all the assets and can instead gain new relationships with their clients' blended families.
Looking back on my own situation, as a beneficiary, what went wrong? It was the 90s so it is safe to say my dad’s investment account performance was great. The problem was that the whole process of meeting with his financial advisor was awkward for us. I don’t think the advisor really knew how to keep and grow the client relationship after his clients passed away. So, the advisor simply lost all the assets.
As a financial professional, I think I learned a lot from my personal experience with my family and with helping many families in similar situations. In most cases, I would say that not only have I been able to continue to be their advisor most of the time, but many of the other family members have also become clients of our firm. We have been able to achieve this by building a relationship right away with family members and being a resource in the time of need.
Here is how it can be done:
1. An advisor should be proactive on building a relationship with as many family members of a client as soon as possible.
That does not mean the advisor needs to manage the finances of all the family members, although that can be a big advantage. There is a big difference in the planning that a 65-year-old needs versus their 20-year-old grandchild. Know what you are good at and don’t worry about being the master of every generation.
2. Connect with clients and their families on a social basis.
Our office has several events throughout the year where we invite all family members to join us. For example, you can hold an annual client BBQ at a park or ask Santa Claus to come to your holiday event and have your clients bring their family for photos.
We post those pictures on our social media pages, like Facebook, and family members can connect with us to see the photos. Both are low-cost events and give the advisor a great opportunity to connect with all of the family.
3. Add value to the other family members along the way.
It is common that, in some families, one of the spouses is responsible for making most of the financial decisions. Sure, an advisor might be able to gain the investments from meeting just with the decision maker, but it is a big mistake to not take time to meet with the other spouse. That spouse needs to meet you and your team and know the plan even if they don’t care about the nuts and bolts of the investments.
4. Offer products to the adult children to help them out.
We know that most of the children of our retired clients have 401(k)s and need overall advice. To provide added value, we offer our clients' adult children a no-cost basic consulting advice as well as complimentary advice on their company-sponsored retirement plans.
5. Jump right in after a loss.
If an advisor is not proactive on helping the family immediately after the loss of a client, that is another mistake. Weddings, social functions, retirement parties, you name it, there is always a fun event to attend. Unfortunately, there is only a limited amount of time for all of us.
One event I would recommend that advisors always attend, when appropriate and known, is a funeral. It is not the time to talk business with anyone, just be there. If you say anything, just say, “I am sorry for your loss, and know that I am here for you. Together we can get through this.”
After a loss, a family is usually left with a lot of emotions. What do they do, who do they call, what should be done? These are all common questions they might be asking themselves. Usually, it's one person who takes the lead; that person could be the surviving spouse or an adult child.
What I like to do is first invite the primary beneficiaries in along with any support members and provide them with a survivor’s checklist. Then, I go over the plan that the client has had up to this point.
Often times, once a beneficiary understands all the positives that you have done for that family and the resources you have to help them with this process, they naturally want you to help out and will keep their accounts with you. And sometimes you will find the beneficiaries will ask you to help them with their own personal financial situation.
Now, instead of losing the accounts, the advisor often gains new relationships and assets.